The U.S. stock market posted its strongest two-day winning streak of the year. The S&P 500’s fluctuations this week showed huge volatility, at nearly 4%, but a surprising background in closing with little loss from the previous week.

The biggest driving force behind the stock market’s recovery in such a short period of time was that recession concerns and yen-carry trade liquidation, which were the cause of the crash, were largely resolved.

For now, the recession concerns caused by the employment report were offset by speculation that it was a temporary phenomenon caused by Hurricane Beryl, solid unemployment benefits, and service indicators.

The liquidation of Japanese yen assets, which is expected to be piled up from trillions to tens of trillions of dollars in the global asset market, was 75% liquidated due to the global stock market crash, and has since stabilized with the Bank of Japan’s promise to withdraw interest rate hikes.

Above all, it seems positive that institutions have been very active in responding to individual dumping and raising the market with buying from the first day of the crash (see investment note on 8/6). Since then, individual investors have joined forces to buy low prices, and the market is recovering.

However, considering that the volatility index (VIX) broke upward through a long trend of more than two years, causing great confusion, it is too early to be relieved that the market’s shaking is over. It seems that we should prepare for the possibility of aftershocks but not over-react.

Now the market will be watching next week’s Consumer Price Index (CPI). Now that concerns about inflation have completely disappeared, it remains to be seen whether it will really hit the back of the market or continue the downward trend and offer relief.